The Question
My husband and I are looking at taking out our first mortgage. We have two children aged 18-months and three who are both in nursery at the moment.
Will our childcare costs be considered on our mortgage application and, if so, can this affect whether it’s approved and the mount we could borrow? Are there any other implications to paying for childcare we should consider before beginning our mortgage search?
Darren’s Answer
Thank you for your question. Childcare costs are indeed factored in – generally, all lenders will count childcare costs when calculating affordability, although the amount can differ lender to lender.
Lenders will consider childcare and school fees as a regular outgoing and commitment, which will be factored into any affordability assessment.
Other considerations would be the flipside to childcare costs which is child-related benefits and tax credits. Many lenders will use 100% of this income, which can sometimes offset the costs.
It is worth completing an affordability calculator with a mortgage broker, who can use this information to search the market.
Many lenders will have different variable for the maximum amount you can borrow, and some differ drastically.
Speak to a broker who can help with this and complete a Decision/Agreement in Principle. That way you can be confident of what you can borrow.
Meet our expert…
Darren Polson is head of mortgage operations at Aberdein Considine. He has been writing a regular column for What Mortgage for over two years and is now here to answer YOUR questions.
If you have a question for Darren please email kate.saines@emap.com or leave a message in the comments below.
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